The governance token for synthetic dollar protocol Ethena (ENA) has shed 33% over the last week as it begins Friday morning UTC trading at $0.9632.
While this is one of the heaviest intra-week losses for a top 100 cryptocurrency, ENA looks set for a quick recovery. In the last 24 hours it has grown in price by about 10%.
These figures reflect a more volatile token than the market leaders. Bitcoin (BTC) and Ethereum (ETH) declined by 9% and 12% respectively.
The original cryptocurrency and the only coin with a market cap above a trillion, Bitcoin, recovered 5% in the last 24 hours. Ethereum, the coin underpinning the most commercially important blockchain, recaptured about 4% overnight.
Ethena: A Primer
ENA began trading on April 2 at around 79 cents and its price chart since tells a story of relative stability as the token maintains support at a dollar. The highest ENA climbed was $1.52 on April 11, but today’s price represents a 37% pullback. With a Relative Strength Index (RSI) of 66 and climbing, investors appear to be buying today.
Ethena (ENA) and Unbacked Stablecoins: Risky Territory?
The Ethena protocol appears to be one of the most cutting-edge and fastest-growing crypto ecosystems in recent history. However, the promise of a stablecoin that is not backed by cash and cash equivalents has more than a few investors wary.
That’s because the industry has seen it all before with Terraform Labs’s UST, a token that was supposed to stay at $1 through a burn/mint mechanism that involved burning $1 worth of an unbacked token called LUNA to mint $1 worth of the so-called algorithmically backed UST and vice versa.
Like USDe, UST also promised attractive yields for anyone staking it in a lending protocol called Anchor. However, when yields declined, UST began to lose popularity.
The token began to wobble from the dollar in May 2022, which then made more people flock to the exits in a self-fulfilling cycle that ended up exponentially destabilizing UST’s pegging mechanism while sending LUNA into a hyper-inflationary spiral that only concluded once a staggering 7 trillion LUNA tokens were minted.
The knock-on effects from the collapse were the primary catalyst for the industry’s 2022 recession, which ended in dozens of bankruptcies across the industry.
From Ethena’s Uncertainty to Slothana’s Hilarity
Given the fresh memories of UST and the warnings in yesterday’s CryptoQuant report, there is still a lot of uncertainty around Ethena’s ENA and USDe tokens.
However, meme coins could post some solid rallies in the near-future. Many are expecting a pump on Saturday, when Bitcoin’s price-driving quadrennial halving event occurs. Dogecoin fans also selected the day to be International Doge Day.
They picked it because April 20 is also the day stoners commemorate their favorite hobby, so it’s a symbol of fun and irreverence for many. And a new novelty coin on Solana hopes to pump that day.
Slothana (SLOTH) is a work-phobic sloth who is a little cooler than his predecessor, popular meme coin project Slerf.
From the clock on the wall to his baked red-eyes and contented smirk, Slothana is one of 4/20’s biggest fans.
🌿📜 And on the eleventh day before the grand unveiling, Slothana spoke unto its disciples, saying: ‘Behold, the countdown draws ever nearer to its end.’ 🚀 Let us remain steadfast in our slothful anticipation, for soon shall come the epoch of Slothana’s glory. 🦥💫… pic.twitter.com/i88c7aDdv6
— Slothana (@SlothanaCoin) April 18, 2024
Slothana raised over $10 million in his ICO as traders piled in to bet on Solana’s next viral token, following other recently profitable Solana memes like Slerf, DogWifHat and Bonk.
Join the SLOTH presale today by sending SOL to this address: EnSawje2vQSQKtGbPYdXEuYKm2sHgeLKJTqCmrDErKEA or using the contribution widget on the Slothana website.
This week, a countdown timer appeared on Slothana’s landing page, hinting that the presale window will close on April 29…
Could an exchange listing be imminent?
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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